A few weeks ago, provincial fisheries minister Trevor Taylor placed a stark choice in front of the province, particularly those involved in the crab business. His choice was more honest that the proposals from Earl McCurdy within the past two days for reasons that will become obvious below.
Since the status quo will not work, he argued, either the industry moves towards a management system like the proposed raw materials sharing system or it accepts a completely free market.
In assessing the government's position it is important to look at the overall management of the fishery. The federal government regulates the number of harvesters in the business. Fisheries and Oceans sets quotas for catching crab and it issues licenses to people to catch the quota.
The provincial government is responsible for managing the processing sector and that's where the most labour is involved. As the provincial government's current backgrounder points out, between 1996 and 2002, the provincial government allowed the processing sector to expand rapidly to meet growing supply but it did so to absorb more and more workers in rural communities who were unable to find other work.
Naturally, there is now a problem in the local processing sector, namely overcapacity. This is just a current buzz-word for too many plants, and with it, too many plant workers for the volume of crab being landed.
It should be noted that the fishing industry globally has too much capacity for processing compared to the volume of fish landings. Increased efficiency in plants has meant that fewer plants can handle landings. As others have noted, changes in the processing sector, changes in currency values and other factors have allowed fish companies in the North Atlantic to ship product to China, finish it and return it to markets here and abroad for less than it would cost to process the same fish at home.
As noted, the current over-supply of fish processing is, in part, the result of decisions taken after 1996 by the provincial government. These decisions were designed, as the government backgrounder notes, to increase the work available in fishplants.
Effectively, this was a return to the disastrous policies of the 1980s in which more and more people were encouraged to enter the fishing industry in one way or another to the point where every fish plant worker barely worked long enough to qualify for basic employment insurance payments. The plant workers, for one group, displaced by the cod moratorium were transferred into processing another species which itself was placed under severe pressure.
Many of the problems currently being faced in the crab industry are due to poor management practices like the ones proposed by the provincial government in the late 1990s. Stress on the stocks has produced an increased incidence of soft shell, a decline in overall landings due to declining stocks and, not surprisingly, a reluctance of people to leave the jobs despite the obvious need to reduce the number of plants and the number of plant workers in the province.
Economically, the current system is unsustainable and, in fact, would have long ago collapsed were it not for the federal government's income supplement programs like Employment Insurance.
The crab problem is a familiar one in the Newfoundland and Labrador fishery.
The provincial government's solution is equally familiar. In order to preserve the existing plant capacity - and with it the existing employment levels - the government is proposing to distribute crab landings evenly among all plants. This system will keep plants open as long as possible. It will secure as many land-based jobs as possible, but it means a reduction in income for fishermen who, until now, have been able to earn record prices for the crab catches as a result of the artificially increased level of competition among crab processors. They have been able to gain not only the very best prices in the marketplace; they have also earned premiums and other incentives from crab processors who need raw material to keep their plants operating. The notion of the despotic fish merchant is hardly applicable.
The government plan is familiar since it avoids any drastic action. It spreads a declining resource as thinly as possible in exactly the way cod stocks were managed before 1992.
Those who think the Williams administration is harsh or that it is simply favouring business interests had better take a closer look. Their simplistic view obviously sits behind the Indy's front page story this week that implies some sort of plot between the processors and government simply because the Premier's chief of staff used to employ one of the fish processor's staffers.
The reality is that the current provincial government is following a time-honoured political approach to managing the fishery as a social enterprise rather than an economic one. Danny Williams is no different from Brian Tobin, Brian Peckford or Frank Moores in this respect. In truth, Williams' administration is in line with virtually every provincial government since 1949.
The goal of the raw materials management plan is solely to keep plants open as long as possible so that they can keep as many people working as possible, even if they all make a relative pittance. It is considered more important to preserve a job or a plant or a community or the backbone of our society and economy, to paraphrase the icthiophiles, than it is to have a healthy fishing industry in which each person can gain a living wage from direct labour alone.
There is no small irony that Williams is being vilified in this case for being exactly what he is not or that he is being blamed for a situation when in fact actual power rests with another set of hands.
The crab industry as it exists throughout Newfoundland and Labrador depends almost entirely on the fishermen who for the last month have staged various criminal acts to support their supposedly disadvantaged position.
The reality is that in any system proposed by the provincial government, the province cannot enforce it. The fishermen alone decide to whom they will sell their raw material. If prices are better in Nova Scotia, then local plants will sit idle as modern, locally owned crab-boats sail from the fishing grounds offshore Newfoundland to the docksides of Cape Breton. Those whose boats can't make the voyage can easily truck the crab, or hire a boat that can make the voyage if they themselves do not wish to sell for the prices available locally.
From time to time, someone will look to Iceland as a model for this province to follow. Iceland does offer a worthwhile model, but not in the way it is often presented. Iceland long ago dismissed the idea of the fishery as an exercise in social engineering. Instead, the fishery is a business, prosecuted as a business.
Were that approach taken in this province, we would have a very hard time for a few years. The provincial government would merely issue licenses to qualifying companies. Whether those companies survived or closed would depend entirely on market forces. There would be no government bail-outs.
If we want to look at approaches from overseas, we might do well to look at the failed eastern European solution which we seem bent on repeating. In Poland, for example, the government withdrew from the economy. Despite initial upheavals the transition to a market economy and with it economic development was largely completed within a year of the collapse of communism in the early 1990s. Neighbouring countries, which took a different approach are still struggling some 15 years later.
In this province, provincial cabinet ministers resisted the opportunity offered by the cod moratorium to restructure the fishery, end the tendency toward state interference and put the industry on a sound economic footing for the benefit of everyone.
Instead, today, we are left struggling with the vestiges of old-style government management approaches that continue in other guises. They have failed utterly in the past time and time again. They will fail again.
Meanwhile, the fish union trots out the old villains for blame, even though the economic circumstances in the fishery have changed dramatically in recent years, and at the same time engages in criminal behaviour and intimidation to advance their position.
The union also embodies a conflict of interest. Their members who process crab on land will surely benefit from the government's proposal. Their harvester-members - who are predominantly male and who clearly dominate the union - would suffer little or nothing at all from it.
The union has been incredibly successful in wresting concessions from government and herein can be found the lie in any notions that the current administration is somehow intrasigent or that the government is about to break the fish union.
Without giving anything except threats and intimidation, the fish union succeeded in having government cut its program from two years to a mere one. Just this past week, and again with nothing but threats and intimidation, the Premier mused about a compensation package for fish plant workers.
Even if the crab plants stay closed, Earl McCurdy has become one of the most powerful political figures imaginable in the province. He can have one set of his members paid entirely by the government for not working. His other members can catch and sell their products for market prices.
And in the meantime, the other business of the government has slowed to a crawl. News headlines are dominated by the fish union members and their illegal actions. Government can scarcely talk of anything else save crab, either inside or outside the Confederation Building.
Yet in the end, the province remains with a fishing industry desparately in need of serious attention and public talk of the industry mired in myths and half-truths.
Most unfortunately of all, the most powerful man in the fishing industry has no incentive to change anything at all.
It is a shame.
